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700 jobs at risk in meltdown at Darrell Lea

July 11, 2012
    • 7 reading now

Philip Wen

...Rocky road: Darrell Lea faces pressure from confectionary imports.

THE 85-year-old Australian icon Darrell Lea, famous for its Rocklea Road and soft liquorice treats, has just weeks to find a buyer to stave off a financial collapse in which up to 700 workers could lose their jobs.

The latest of a string of retailers buckling under the strain of weak consumer sentiment, Darrell Lea yesterday called in administrators PPB Advisory, admitting it would struggle to pay its staff from week to week.

PPB has now started an urgent search for a buyer, but has not ruled out the closure of unprofitable stores.

It has secured a commitment from the founding Lea family to stump up enough cash for the company to keep running for the next four to eight weeks.

Bruce O’Keefe, the regional secretary of the Australian Manufacturers Workers Union, which represents 160 workers at the confectioner’s factory in Sydney, said the move to voluntary administration came as ”a total and absolute shock” that left staff ”shocked, angry and dismayed”.

”People were just dumbstruck, they didn’t know how to handle it,” said Christine Bailey, a worker on the factory floor. ”I saw one girl from admin – she was crying.”

Mr O’Keefe said the union would make an application to Fair Work Australia due to Darrell Lea’s lack of consultation and what he described as a broken agreement for management to set aside money in a trust to guarantee workers’ entitlements.

”There are concerns about whether entitlements will be recovered,” he said. ”[Workers] are trying to find out what it means for their jobs, but it doesn’t look good at this stage.”

PPB’s Mark Robinson said soft retail conditions and the strong dollar contributed to the company’s woes, while he conceded the business might not have been managed as efficiently as it could have been.

Despite the short window of time to find a buyer, Mr Robinson said he was confident a suitor could be found due to Darrell’s Lea strong brand presence.

”We’ve had a lot of cold calls … from some well-credentialled organisations,” Mr Robinson said. ”There’s a range of players there.”

A successful sale, he said, would help guarantee the payment of workers’ entitlements.

Tim Piper, a director of the Australian Industry Group’s food and confectionery division, said his member companies were under pressure from increasing numbers of confectionery imports.

”Darrell Lea are not immune to that – in fact, they’re right in the firing line,” he said.

Executive director Michael Lea could not be reached for comment yesterday.

Darrell Lea employs about 700 people at its Sydney manufacturing base and at shops across Australia, New Zealand and the US.

The company is 100 per cent owned by the Lea family, which established its chocolate business in Sydney in 1927.


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